Orf virus is an epitheliotropic DNA parapoxvirus with a worldwide distribution that induces acute pustular lesions in the skin of sheep, goats and man. Genetic mapping and sequencing of the orf virus genome have revealed that orf virus has a typical poxvirus distribution of genes, with those essential for viral DNA synthesis, replication and packaging located in the central region, and those involved in virulence concentrated in the terminal regions. The immune and inflammatory response to orf virus infection in the skin and local lymph is vigorous and typical of an anti-viral response, involving CD4+ helper and CD8+ cytotoxic T cells, interferons and antibodies. In spite of this, the virus can repeatedly infect sheep. Host acquired immunity involving CD4+ T cells and interferons is effective in controlling the extent of viral replication, but does not prevent reinfection. Several virus putative virulence genes have been identified. These are: viral homologues of ovine vascular endothelial growth factor (VEGF); ovine IL-10; vaccinia virus E3L interferon resistance gene; and in addition a viral activity that inhibits the cytokine granulocyte-macrophage colony-stimulating factor (GM-CSF). These may be responsible for rescuing orf virus, at least temporarily, from host immunity and aiding viral replication in epidermal cells.